Economic Growth and Human Development in India: Are States Converging?

Abstract

This study focuses on three aspects of the association between human development and economic growth in India: (i) the pattern of the relationship between economic growth and human development in India at the national and state levels; (ii) whether economic growth was converging at the state level; and (iii) whether human development was converging at the state level. In the last two decades, India outperformed advanced and developing economies in per capita income growth and health and education indicators, propelling itself into the virtuous category or in other words, where Economic Growth (EG) and Human Development (HD) are mutually reinforcing (high-EG, high-HD). By employing data for 26 states and union territories (UTs) for three decades (1990–2019), a diverse pattern was observed in the relationship between economic growth and human development, with most of the states (16) in the virtuous category, and the others in three different categories. However, no clear pattern emerged from the dynamic movements in the last three decades, as there were cases of states moving from one category in one decade to another category in different decade. There was no evidence of economically weaker and low HD states catching up with economically well-off and high HD states, respectively. However, club convergence was occurring, i.e., economically weaker states were catching up with economically better-off states in the low-income, high-HD club. Economically weaker and low HD states can catch up with economically well-off and high HD states only if similar conditions are created.